This article has been reprinted from the USDA Aug. 8 Grain Transportation Report.
During the second quarter of 2019, transportation costs for shipping U.S. wheat from Kansas and North Dakota to Japan, through the Pacific Northwest (PNW) and U.S. Gulf, increased from the previous quarter.
Year-to-year transportation costs, however, were mostly down for shipping wheat to the PNW and the U.S. Gulf.
Quarter-to-quarter landed costs (farm value plus transportation costs) for shipping wheat to Japan also decreased from Kansas and North Dakota.
Year-to-year total landed costs for shipping wheat decreased for Kansas and North Dakota as well (see Tables 1 and 2).
Quarter-to-quarter transportation costs, for shipping wheat through the PNW, increased 4 percent from Kansas and 3 percent from North Dakota.
Quarter-to-quarter transportation costs for shipping wheat from Kansas and North Dakota through the U.S. Gulf increased 5 and 4 percent, respectively.
Year-to-year transportation costs for shipping wheat through the PNW were down 1 percent from Kansas, but were unchanged from North Dakota.
Year-to-year transportation costs to the U.S Gulf decreased 1 percent from each state.
Quarter-to-quarter total landed costs for shipping wheat from Kansas and North Dakota, through the PNW and the U.S. Gulf, decreased mainly because of farm values.
Year-to-year landed costs for shipping wheat from Kansas, through the PNW and U.S. Gulf, decreased due to lower transportation costs and farm values.
Total year-to-year landed costs for shipping wheat from North Dakota through each region decreased primarily due to lower farm values.
PNW Cost Analysis:
During the second quarter, the total landed costs for shipping wheat from each state through the PNW to Japan, ranged from $264 per metric ton (mt) to $268 (see table 1).
Year-to-year landed costs to ship wheat from the PNW decreased 3 percent from Kansas and 10 percent from North Dakota.
The decreases were caused primarily by lower farm values. Rail’s share of total landed costs to the PNW, from Kansas and North Dakota, increased from last year.
Second quarter farm values were 64 percent of the landed cost for shipping from Kansas and 66 percent from North Dakota.
These costs were equal to last year’s for Kansas, but above last year’s for North Dakota (Table 1).
PNW ocean rates increased 3 percent from quarter-to-quarter due to firm coal and iron ore trade (July 25, 2019 Grain Transportation Report (GTR)), but decreased 3 percent from year to year.
Quarter-to-quarter rail rates for shipping wheat from Kansas to the PNW were unchanged.
North Dakota rail rates, however, were up 1 percent. Year-to-year rail rates, to ship wheat to the PNW, increased over 2 percent from Kansas and 4 percent from North Dakota.
Trucking rates for wheat jumped 25 percent from quarter to quarter, as demand for U.S. wheat increased.
Year-to-year trucking rates decreased 9 percent. Transportation costs in the PNW in the second quarter represented 35 to 37 percent of the total landed costs (see table 1).
U.S. Gulf Cost Analysis:
Quarter-toquarter total landed costs for shipping wheat through the U.S. Gulf from Kansas and North Dakota decreased 3 percent.
From year to year, landed costs for shipping wheat to Japan from the U.S. Gulf decreased 3 percent from Kansas and 10 percent from North Dakota (see table 2).
The total landed costs to ship from each state, through the U.S. Gulf, ranged from $264/mt to $290/mt.
Second quarter farm values represented 64 percent of the U.S. Gulf’s landed costs from Kansas and 61 percent from North Dakota.
This is unchanged from last year for Kansas and a decrease for North Dakota (see Figure 2 & Table 2).
Bulk ocean rates for shipping wheat, to Japan from the U.S. Gulf, increased 5 percent from quarter to quarter, but decreased 2 percent from year to year.
Rail rates for shipping wheat to the U.S. Gulf increased 1 percent from Kansas, from quarter to quarter, but were unchanged from North Dakota.
Year-to-year rail rates for shipping wheat to the U.S. Gulf from Kansas and North Dakota increased 3 percent and 2 percent, respectively.
During the second quarter, Kansas and North Dakota transportation costs to the U.S. Gulf represented 37 and 39 percent, respectively, of the total landed costs.
Both totals are below the previous quarter and last year (see table 2).
PNW vs. U.S. Gulf Cost Comparison:
Quarter-to-quarter transportation costs for shipping wheat to Japan were down from each state.
Total landed costs were down as well for each state, during this period.
Year-to-year transportation costs were mostly down for each state (tables 1 and 2).
From year to year, total landed costs for shipping wheat decreased for each state due mainly to lower trucking rates and ocean rates (see tables 1, 2).
According to USDA’s Federal Grain Inspection Service, wheat inspected for export to Japan, during the second quarter, totaled .585 million metric tons (mmt).
This represents a decrease of 17 percent from last year and is 10 percent below the first quarter of 2019.
Totaling 7.8 mmt, second-quarter wheat exports to Japan accounted for 7 percent of the total wheat exports for the quarter, a 45 percent increase from last year (July 18, 2019 GTR).
Due primarily to decreasing export competition abroad, total U.S. wheat exports were notably up during the second quarter. U.S. wheat exports for 2019/20 are expected to increase 2 percent, according to the USDA’s World Agricultural Supply and Demand Estimates July report.